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Question
Give any two differences between horizontal analysis and vertical analysis of financial statements.
Distinguish Between
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Solution
| Sr. No. | Horizontal analysis | Vertical analysis |
| 1. | It requires financial statements of two or more accounting periods. | It is conducted for one accounting period. |
| 2. | It involves a study of same items of different periods. | It involves a study of different items of same period. |
| 3. | It provides information in absolute and percentage form. | It provides information in percentage form. |
| 4. | This analysis can be done by preparing a Comparative Balance Sheet and a Comparative Statement of Profit and Loss. | This analysis can be done by preparing Common Size Balance Sheet, Common Size Statement of Profit and Loss and accounting ratios. |
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